The new Chancellor, Sajid Javid, has dismissed a front page story run by The Times that he is considering a change to Stamp Duty by switching the payment from buyers to sellers.
The Times reported at the weekend that it is one of several tax changes that the former Secretary of State for Housing is considering.
The Times, known as the paper of record, ran the story under a strong headline, which more than suggested that the change to Stamp Duty was a given: “Sellers to pay Stamp Duty under Javid tax shake-up.”
However, the front page story and accompanying interview did not seem to back up the headline, with Javid only saying, apparently of Stamp Duty: “I’m looking at various options. I’m a low tax guy. I want to see simpler taxes.”
The story led to a huge amount of discussion and speculation on social media, including on Javid’s own twitter account.
Yesterday Javid tweeted in response: “More speculation about Stamp Duty this morning. To be clear, I never said to @thetimes I was planing to put it on sellers. I wouldn’t support that. I know from @mhclg that we need bold measures on housing – but this isn’t one of them.”
Javid, who was Housing Secretary from July 2016 until April 2018, was giving his first interview as Chancellor. The Times ran the Stamp Duty story as its front page news splash, following it up with inside pages of editorial including comment and the interview itself.
Javid was appointed to the post by new prime minister Boris Johnson who said during the Tory leadership campaign that he would cut the highest rate of Stamp Duty from 12% to 7%, hinting that he might cut it altogether for properties under £500,000, and would consider reversing the tax burden from buyers to sellers.
However a switch now seems to have been decisively ruled out by the Chancellor.
Certainly moving the Stamp Duty tax burden to sellers would have been controversial – or as one of the tweeters put it to Javid “mental for a fragile housing market”.
Critics say it would have frozen the market between The Times story and the Budget, whose date has not yet been given. And while it would benefit first-time buyers and help families wanting to trade up to larger homes, they say it would deter down-sizing.
House prices would almost certainly rise across the board, it is argued, with vendors wanting to factor in the tax.
However, the Association of Accounting Technicians (AAT) rushed out an announcement on the back of The Times story, welcoming the possibility of a switch of Stamp Duty liability from buyer to seller.
In a statement, the organisation said: “AAT has been campaigning for this change for several years, met Boris Johnson to discuss the plans earlier this summer and has already had an exchange of correspondence with the new Chancellor on the idea.
“The organisation has also engaged with numerous civil servants, special advisers and politicians from across the political divide on the issue.”
Its head of public affairs and policy, Phil Hall, said: “AAT is naturally pleased that the Chancellor has publicly acknowledged he is giving serious consideration to our proposals.
“AAT does not believe switching Stamp Duty liability is a panacea, but it would be considerably fairer, simpler, more effective and cheaper than the current Stamp Duty regime.”
Stamp Duty currently brings in some £9bn a year.
More speculation about stamp duty this morning. To be clear, I never said to @thetimes I was planning to put it on sellers, and I wouldn’t support that. I know from @mhclg that we need bold measures on housing – but this isn’t one of them. https://t.co/9OVk3XiqMd
— Sajid Javid (@sajidjavid) August 18, 2019
Comments (10)
Anyone who has worked in this industry for a sustained period of time will know that the vast majority of private residential purchasers will buy regardless of the stamp duty implications, first time buyers who are buying their first home at at more then £300,000 but cant afford the stamp? Really? Purchasers who are moving up or down in the market will either have the funds or will use their equity, this has always been the case and should not be altered with. The hard reality is that investors who would be buying up property’s at the lower spectrum have been disappearing for years due in part to the changes in stamp duty, love or hate them as an industry they are vital either buying up disposal sales and or just as importantly buying those property’s being sold by first time buyers which in turn releases them to buy their next property.
Simplification – yes!
Tinkering with current system – No!
With all respect to first time buyers etc if the cost of stamp duty is the deciding factor regarding if you buy or do not buy, then you shouldnt be buying
SDLT needs fundamental change rather than just “swappsies”.
Not much point believing anything in the mainstream media until November 1st. JMHO
Shame as this was a great idea, would have helped over 90% of home buyers and won the Tories lots of votes without any spending commitment. It would probably have led to quite a few more transactions, something we desperately need as it’s not been this bad in my 33 years in the business.
The idea it would lead to price increases is just plain stupid and demonstrates a lack of understanding of the business. If I’m selling a property and have to pay a tax based on its value there is probably some pressure to be more realistic about the price as the higher it is, the more tax I’ll have to pay.
Hopefully it’s just been ruled out until the Budget!
Such proposals would seriously discourage downsizing and further gridlock supply. It would encourage under occupation. So what makes a bunch of technicians experts in the housing market?
“Shame as this was a great idea, would have helped over 90% of home buyers…”
Helped them how, exactly, “Awesomeagent”?
Just to be clear – vendors who have probably already paid stamp duty on the purchase would have to pay it again on sale – is this a good idea? From a personal point of view it would definitely deter me from downsizing I’d probably split mine in two and rent part of it. Also if I were younger and had a smaller house I would extend instead of paying the stamp duty. It would definitely cause a gridlock. Basic economics would dictate that if more people are staying put then there would be less supply and house prices would go up. The ‘90% of home buyers’ probably wouldn’t be able to find a house!
And what about those in negative equity in the future? Just lead to more repossessions in the next downturn which we would be foolish to pretend will never happen.